What is BuyBox?
As a Amazon or Flipkart seller, the one factor that has highest impact on your sales is BuyBox. What is BuyBox? According to Amazon it is the box on a product detail page where customers can begin the purchasing process. But for sellers it means selected seller that gets the order when users click on Buy Button.
Why is winning BuyBox so important?
Roughly 90% of orders for a product are secured by the seller in the BuyBox. To put this in perspective, if there are 100 orders for a product, BuyBox seller gets 90 orders while the rest 10 are shared amongst all other sellers (on an avg 20 for popular products).
Now the million Dollar (or Rupee) question is how to gain the BuyBox and retain the same. Let’s analyze the factors that affect BuyBox win % both on Amazon and Flipkart.
Cut Off criteria for BuyBox
Amazon and Flipkart have cut off criteria which you have to satisfy to win BuyBox. Both do not share the exact criteria but here is the list based on our experience.
Sellers not satisfying this criteria are not eligible to win BuyBox. So you need to keep very tight control to ensure right product is shipped with good packing on or before time every time and the leave the above boundary criteria for some cases which are out of your control.
High Impact Factors for gaining BuyBox
All the sellers who qualify for the above criteria fight it out in open to win BuyBox. Following factors affect your BuyBox win %
A product fulfilled by Amazon FBA and Flipkart Advantage respectively have much higher chances of winning BuyBox.
Many sellers see this as a tactic by Amazon/Flipkart to promote their own fulfilment channels (Amazon FBA and Flipkart Advantage respectively) but all agree that both these marketplace have a very efficient delivery mechanisms and hence get higher chance of winning BuyBox.
Selling through FBA/Flipkart Advantage attracts additional charges so this is surely a balancing act but wherever possible you should try to use these services to increase BuyBox win %.
Your selling price
Selling price along with Fulfillment channel has very high impact on winning BuyBox. There are two important aspects here, one is your cost and second is to know and set the optimum price.
a) Know your cost accurately
You should calculate your cost accurately and account for all the overheads to ensure you never sell at loss (unless of course you are funded like Flipkart or have deep pockets like Amazon). Ensure that you atleast account for the following cost/overheads
- Sales Tax/Vat
- Shipping Cost
- Packing Cost
- Market place fixed fee
- Collection Fee
- Service Taxes levied by marketplace
- Your minimum margin
This seems to be a no brainer but trust me, a lot of the sellers that I talked to were not doing this calculations correctly. Most sellers use a thumb rule of say 30% above purchase price. With due respect to their experience, this calculations were correct for most of the products but they were selling roughly 10-20% products at losses.
These loss making products were unfortunately sold in higher numbers due to their cost competitiveness and making huge dent in their margins. They did not even realize it till they started using our repricing application which also does smart cost calculations to ensure no losses (one customer increased his margin by almost 40%). Sellers never did the reconciliation which is really a difficult task and a topic for a different day.
b) Find the optimum price and set the same dynamically
Once you know your cost, this becomes your lowest price but you should not always set your selling price to this amount. You need to find the optimum price by continuously monitoring the competitive prices and finding the sweet spot where you can get the BuyBox at the highest possible margin.
This can be done manually for only handful of products, but for more products you should use a good repricing application.
Good seller rating is critical both as a cut off criteria (as explained above) but also plays an important role in gaining the BuyBox.
There are two aspects here, one is to ensure that you gain good ratings for a job well done by encouraging your customers to rate you on these marketplaces and secondly try to avoid any negative feedbacks.
Care should be taken and a good organizational culture should be imbibed in the team so that right material is shipped with good packing at the right time (or early if possible) every time. But mistakes do happen, after all we and our teams are humans. The most important thing is to accept the mistake and take corrective action As Soon As Possible. If you can tender a well worded apology to the customer and send same privately or as a response to their review, there are chances the customer might take back the review or edit the same to make it a bit milder. This is again a topic that merits a separate post so will leave it here.
Shipping Time or SLA
Your SLA for shipping time is also critical in deciding the BuyBox user. Remember Amazon/Flipkart engineers write the algorithm such that BuyBox winner is the most probable seller to get the order if a user reviews all the seller options. As other cases you need to have a balance, you cannot set a very aggressive SLA that you can not always meet else you run the risk of having higher Late Shipment Rates which could possibly make you ineligible for BuyBox (as explained above). At the same time a very conservative one would mean your chances of gaining BuyBox are reduced. Keep reviewing this SLA from time to time to ensure you are competitive.
Medium to Low Impact Factors for gaining BuyBox
The following factors have limited impact but still important
Packing is also one of the small but important point. Care must be taken while packing the package. Customer’s are happy if they see their package packed properly and you get an positive feedback on the contrary a bad packing could get you a negative rating. Packing itself may not directly affect the chances but it does affect Seller Rating which has significant impact of BuyBox acquisition.
Feedback count is the count which is given by the customers to the seller. More positive the feedback, more is it beneficial. Sellers should try to look with these aspects (packing, shipment on time, valuable price, delivery on time ) which would lead to more positive feedbacks.
Ensuring very limited late shipments is critical as it is part of cut off criteria as mentioned above. But once you maintain these in the limits, the impact of late shipments on gaining BuyBox is limited.
Order Defect Rate (ODR)
Same as Late shipments, this is part of the cut off criteria. But once the cut off criteria is met, the effect of ODR on BuyBox capture % is limited.
Number of Refunds
Number of times a user asks for refund has limited direct impact on BuyBox but has indirect impact on ratings. So you should see how this can be avoided. Again a lot of times this is not in the control of sellers.
Inventory refilling means, when the seller is out of stock. This again has some impact on BuyBox, but the bigger impact is loss of opportunity when you are out of stock. You should use a good inventory forecasting tool to ensure you do not overstock and also never go out of stock.
Number of customer cancellations again have limited impact on winning BuyBox but has huge impact on seller rating, reviews and also has cost considerations as sellers have to bear part of the commission and courier charges.
In summary, winning BuyBox is critical for Business and can be achieved by below 3 steps
- Ensure right product is shipped with good packing before time everytime. This will ensure you never get closer to the cutoff criteria and your ratings are always high.
- Sell using FBA/Flipkart Advantage wherever possible
- Set right price which is optimum based on dynamic competitive prices and correctly calculated cost and overheads. Using a good repricer sure helps.
Thanks for reading through the long post. Hope this helped a bit.
Have a Great Day Ahead !!!